Multiple fees spark dispute

Consumer groups and telcos squared off again last week in an increasingly heated debate over monthly fees paid by consumers and business users.

The action kicked off when the Consumers Union, the Consumer Federation of America, AARP, the National Association of State Utility Consumer Advocates and the Texas Office of the Public Utility Counsel called for the elimination and reduction of several fees.

The groups forwarded a proposal to the FCC Jan. 31, recommending a reduction in subscriber line charges of $1 per month, the elimination of pre-subscribed interexchange carrier charges (PIC) and a cutback on special access charges paid by many business users.

The recommendations were designed to amend a proposal submitted to the FCC last summer by the Coalition for Affordable Local and Long-Distance Services, a group that includes AT&T, Bell Atlantic, BellSouth, GTE, SBC Communications and Sprint.

CALLS claims its proposal outlines plans to preserve affordable universal services for all telephone customers. It includes a Lifeline program with lower rates to protect low-income consumers and offers more choices for consumers, lower and simpler phone bills and wider access to the Internet and other telecom services, said CALLS representatives last week.

"The CALLS plan reduces the total charges for access," said Frank Gumper, vice president of federal regulatory planning for Bell Atlantic. It also provides $650 million in universal service funds to ensure that companies can build, maintain and operate first-class telephone networks in rural America, he said.

Instead of doing away with PIC charges, which are charges paid by long-distance companies to local phone companies to connect long-distance calls, the CALLS proposal combines them with the subscriber line charge, effectively eliminating PIC charges billed to Lifeline customers who don't pay the subscriber line charge, said a BellSouth spokesman. The combination will prevent long-distance companies from raising PIC charges because the fees will be paid directly by consumers, he said.

Under the CALLS plan, total charges by telephone companies would fall by at least $5.8 billion over five years, with even greater reductions as local competition increases, said CALLS attorney John Nakahata.

Not so, said the consumer groups that aligned last week.

Although the CALLS proposition includes a reduction in some fees, it raises other monthly charges and results in a net increase for the majority of consumers, said a spokesman for Consumers Union.

"The basic premise is most consumers are not reaping the benefits of the deregulation of the telecom markets," he said. "Specifically, technology and deregulation have lowered the cost of providing service for the providers, but those savings aren't being passed on to all of the consumers."

PIC charges should be paid by the interexchange carriers, saving consumers $1.8 billion per year, according to the proposal the consumer groups submitted to the FCC. In all, the suggested amendment to the CALLS proposal would reduce long-distance costs to consumers by roughly $4 billion per year, the spokesman said.

But the consumer groups' plan is a shortsighted attempt to "micromanage the consumer marketplace through price control," said Joel Lubin, vice president of federal government affairs for AT&T.

Pointing out that several other consumer groups have backed the CALLS plan, Nakahata said the opposing proposal will "strand millions of Americans on the wrong side of the digital divide."

"[It] does nothing to help resolve the long pending, much delayed universal service issues sitting before the FCC for four years since the Telecom Act [of 1996] was passed," Nakahata said. "Our plan would let competition drive prices down so you don't have to rely on Ph.D.s in economics to get the prices right. Their plan tries to rely on price control."